The Bank of Japan's decision to target the yield curve and allow inflation to overshoot its 2 percent inflation target are welcome steps in Japan's long battle to encourage inflation, said former U.S. Treasury Secretary Lawrence Summers.
Targeting the yield curve will keep interest rates low enough to encourage government borrowing, which is needed to help support the economy, Summers told reporters at a seminar hosted by the BOJ.
The BOJ's commitment to overshoot its price target should encourage inflation expectations is something other central banks should consider, said Summers,... read more

Related news

The Bank of Japan on Wednesday decided to adopt a target for long-term interest rates in an overhaul of its massive stimulus program.
The BOJ maintained the 0.1 percent negative interest rate it applies to some of the excess reserves that financial...

The Bank of Japan's assertion that it can control the entire span of market interest rates is an exaggeration as in practice it is only targeting the benchmark 10-year bond yield, former BOJ board member Atsushi Mizuno said.
Mizuno, in a telephone...

The U.S. Treasury yield curve flattening could become a concern for economic growth when two-year and three-year Treasury note yields are about the same, and the price per barrel of WTI crude oil falls into the $30-dollar range, said Jeffrey Gundlach,...

The yield spread between two- and 10-year gilts peaked at 147.3 basis points, its highest level since around late November, as the curve steepened by 4 basis points before flattening.
The 2/30-year curve reached its steepest since late February, while...

Japan's efforts to stimulate its economy through monetary easing is likely to be "mostly good" for developing Asian economies such as Thailand and the Philippines, which produce components for Japanese exporters, the World Bank said.
The...

Such steps would help the new bank governor, Haruhiko Kuroda, mandated by Prime Minister Shinzo Abe to do whatever it takes to achieve the bank's 2 percent inflation target in two years, meet market expectations of a "regime shift" from his...